VietNamNet Bridge – Under the draft of the new Ordinance on Foreign Exchange,
individual residents can borrow money from foreign sources, pay debts and must
be responsible for the borrowing in accordance with the regulations to be drawn
up by the government.

If the draft ordinance is approved, Vietnamese individuals would be able to take
initiative in borrowing foreign currencies from foreign sources for their
personal spending or investments and paying debts.

The State Bank of Vietnam thinks that it’s now the right time to loosen the
policy on foreign currency management applied to individuals.

However, economists do not think this way. The draft ordinance, therefore, has
not been applauded.

Dr. Tran Hoang Ngan, a member of the National Advisory Council for Monetary
Policies, believes that Vietnamese individuals should not be allowed to borrow
foreign currencies from foreign sources. It’d be better if only legal entities
have the right to do this.

According to Ngan, it’s highly possible that individuals, who borrow money to
run their business or buy houses, would not be able to pay debts. “In this case,
they would spoil the national prestige and national brand,” Ngan said.

“I wholeheartedly remain against the new regulation,” he said.

Ngan agrees that it’s necessary to promulgate the new Ordinance on Foreign
Exchange in order to help stabilize the foreign currency market, especially when
the black market has resumed its operation. However, he still believes that the
ordinance should be revised, even though the draft ordinance is expected to be
ratified in 10 days.

Dr. Tran Du Lich, a well-known economist, has agreed that it’s now not the right
time to loosen the foreign exchange management policy.

Every year, tens of millions of Vietnamese farmer householders have to work hard
to be able to export $30 million worth of products. Meanwhile, every year, the
rich people remit 3.5 billion dollars abroad for healthcare and study services.

Citing the figures, Lich said that foreign currencies have been flowing out of
Vietnam, which may badly affect the national balance. Therefore, he has
suggested keeping the current strict control over the foreign currency inflow
and outflow as an issue relating to the national balance.

Agreeing that a big amount of foreign currencies has been going out of Vietnam
every year, a senior executive from Bao Viet Bank said that it’ll be of no use
to prohibit people to remit foreign currencies abroad. It’s simply because the
demand for having healthcare and study services overseas has been existing. If
the government still prohibits the remittance, people would still try to bring
money abroad, but through illegal channels.

The banker said that instead of a ban, Vietnam should set up reasonable policies
to restrict the remittance (collecting high fees, imposing tax…). This would not
only help restrict the foreign currency remittance abroad, but also help
increase the tax sums to be collected to the state budget.

In related news, the draft of the new Ordinance on Foreign Exchange does not
include the provisions relating to the gold market management, which has raised
controversy.

Dr. Lich stressed that foreign currencies means gold as well, while the gold
management remains a very burning issue for now.

According to Nguyen Van Giau, Chair of the National Assembly’s Economics
Committee, the new ordinance is expected to get the ratification by March 18 or
19. The new ordinance is scheduled to take effects on July 1, 2013.